OSLO Nov 25 An increasing number of European
oil refineries face early closure as developing nations build
their own capacity and rising volumes of fuel do not need
refining, the International Energy Agency's chief economist
A large number of Europe's refineries already are idled or
operating below capacity as consumers such as India and China
increasingly prefer importing crude to refined products and
Middle East producers prefer exporting products to crude,
economist Fatih Birol told a conference in Oslo.
"There is a growing share of natural gas liquids coming to
(the market) as a byproduct of gas production, and they do not
need to go to refineries," Birol said.
"We already have spare and idle capacity in the refinery
market, and on top of that we are seeing new refining capacity
built, especially in emerging countries," she added.
"We are going to see, we believe, a substantial amount of
refineries risking closure ... in the next 20 years and a
significant portion of them will be in Europe.
A flood of U.S. and Asian diesel and shrinking overseas
demand for gasoline have been pummelling European refiners,
raising fears over more closures.
European refinery output fell 6 percent in October from a
year earlier as plants cut production due to poor margins in
addition to seasonal maintenance.
Birol added that top Middle East producers are also becoming
big product consumers because of their own growing industries,
which creates incentives for them to build refining capacity to
stop having to import back their own oil in refined form.
Close to 2 million barrels per day of European capacity have
been mothballed since 2009, and ageing plants that rely more
heavily on gasoline exports are most vulnerable, experts said.
(Reporting by Balazs Koranyi; editing by Jane Baird)